Tahoe-Truckee Market Trends and Functional ObsolescenceColleen Loiseau, September 15, 2019 in Market Trends, Modern Architecture
A clear shift toward Modern architecture has become apparent in the Tahoe-Truckee Region. Open floor plans, clean lines and simplicity are increasingly popular, while traditional mountain homes with intricate finishes and closed floor plans are suddenly dated. Functional obsolescence describes this phenomenon in real estate: the cost to modify an existing home to meet current trends exceeds the expense to buy a new home, in many cases. A stylistic preference in the region occurred circa 2010.
Gray’s Crossing transactions thus far in 2019 are a perfect example: 20 property trades and 3 more pending, only 1 of the sold homes was built prior to 2010. The home that was built in 2008, endured a 20% price reduction before procuring a buyer. In addition to a notable change in end user desires, sellers of older homes also have to compete with steep developer incentives for buyers. The success of the Signature Collection at Old Greenwood exemplifies this change in the playing field, (The developer offers to waive the $13,500 initiation fee to Tahoe Mountain Club, and cover 1 year of club dues, a value of $21,000.)
The golf course community recorded 6 sales since January, 5 of which were the brand new residences on Sutter’s Trail. The outlier was built in 2008, and sold at a 23% discount from the initial list price.
New construction paired with developer incentives has proven to be what consumers are hungry for. Pre-2010 homes spend more days on market, and tend to sell at a reduced list price. Consumers are increasingly willing to pay a premium for their modern counterpart. This market observation also poses an interesting opportunity for buyers that prefer a larger home: because the cost to build has sky rocketed in recent years, (due to the increase in cost of raw materials and lack of skilled labor,) they can secure a luxury, high-end, Tahoe home at a reduced price per square foot.